Trimedyne to Sell 2 Units to County Investment Group

Trimedyne Inc., the Tustin-based medical laser firm that has suffered several recent setbacks, said Thursday that it has agreed to sell two subsidiaries to a local investment group for $3.5 million in cash.

Trimedyne said the investors, headed by county real estate developer Richard Brown, had made a non-refundable $50,000 cash payment in exchange for an option to buy Poly Optical Products Inc. of Santa Ana and Laser Ionics of Tampa, Fla., on or before Dec. 1.

Trimedyne said it expects to book a one-time gain from the transaction in the quarter ended Dec. 31.

Poly Optical Products manufactures plastic optical fiber cables; Laser Ionics produces argon and krypton lasers. Both companies, whose products are used in a broad variety of industrial applications, were bought by Trimedyne in 1983.

Richard Demmer, executive vice president of Trimedyne and president of both subsidiaries, said the firms were being sold because Trimedyne wants to focus exclusively on its core medical-technology business.

The units will be operated jointly by Brown’s investment group, although they will probably not be merged, Demmer said.

He added that it had not yet been decided whether he would stay with Trimedyne or join the new firm. Brown could not be reached for comment.

Trimedyne, which pioneered the use of laser-assisted catheters to open blocked arteries, reported in June its first quarterly loss in two years, amid questions in the medical profession about the effectiveness of its technology.

Initially, Trimedyne believed that its lasers could be used for any kind of blockages and looked forward to exploding out of its niche--treating arteriosclerosis in the legs--to the much more lucrative business of treating heart disease.

But the company now admits that its catheters cannot be used in many cases, and some observers expect the Trimedyne products to be overtaken by newer technologies.

Demmer said the sale of the two subsidiaries had nothing to do with Trimedyne’s recent problems and noted that the company has a very strong balance sheet, with $9 million in cash.

Rather, he said, Trimedyne had once used lasers built by Laser Ionics in its products, and Poly Optical Fibers served as a manufacturing facility for the Trimedyne catheters.

But about three years ago, Trimedyne moved to a new, more sophisticated type of laser and geared up its own manufacturing operations, Demmer said. Thus, the two subsidiaries were considered expendable; they were sold now because the right offer came along.